Loss of AAA status tough but logical for US

WASHINGTON, August 7, 2011 (AFP) – Standard & Poor’s decision to strip the United States of its triple-A credit rating is a tough but logical sanction of the country’s inability to contain its spiraling debt, experts say. S&P slashed the US rating for the first time in history Friday from its sterling AAA to AA+, removing the United States from the coveted circle of top borrowers that includes G7 partners Britain, Canada, France and Germany.

“Their critique of our dysfunctional politics and inability to get revenues in the deficit reduction deal makes a lot of sense,” economist Jared Bernstein, a former adviser to Vice President Joe Biden, wrote on his blog.

The step was perhaps not an easy one for the agency, but it came after a bruising months-long partisan battle between Democrats and Republicans over how to raise the $14.3 trillion debt ceiling and cut the huge US deficit.

Economist Nouriel Roubini, known for his gloomy predictions, said the United States should have seen the writing on the wall when agencies docked the ratings of European countries on similar grounds. “They downgraded a bunch of European countries, and the Europeans were bashing the rating agencies — why are you downgrading us and not t